Question

Problem 4 - If interest rate is 15% per year. Find the nominal interest rate equivalent to 15% if: 1. Compounding is every three months (quarterly) 2. Compounded hourly 3. Compounded continuously Note: Use 4 decimal points like 15.3542%

Answer 1

Given,

Interest rate= 15% per year.

To find:

The nominal interest rate equivalent to 15%.

Compounding is every months = (1+0.15) =chti(n)/4)^H = 1.22 :). 50 the compounding is every months is 24.22% 2) Compounded hously - Cht 0.152 =(tti(n)/8760)^(8760) = 13.97%. *Time = 24 hours * 365 = 8760 hours in a year 3) compounded continuously 0.45 = enci) - = 13.98%.